What picture do your current levels of staff retention, absenteeism and productivity paint about your organisation? A portrait of a healthy, contented workforce, or one that shows low engagement and high staff turnover?There are many factors that can influence employee engagement. Company culture, work-life balance and recognition of a job well done are key motivators, but pay and employee benefits continue to be decisive push and pull factors for recruitment and retention. For startups and SMEs, the ability to offer a comprehensive set of benefits may offset an inability to pay high salaries.Investing in an employee benefits package that meets the financial and wellbeing needs of staff in the round can be a cost-effective approach. But to understand the cost of employee benefits and their value to both the staff and the business, a cost-benefit analysis should be prepared.Here, the outlay for each element of the investment can be calculated—from monthly insurance premiums to the time and resources required to administer the scheme—and compared with the quantitative or qualitative return for the organisation.Calculating the cost of employee benefits may appear relatively straightforward, but measuring the employee benefits ROI is more challenging.The aforementioned trio of KPIs—staff retention, absenteeism, and productivity—can provide a snapshot of how motivated staff are. And while there are numerous measurable employee rewards and perks that can provide meaningful data, such as insurance, healthcare, car loans and pension contributions, others are harder to quantify. Job satisfaction is subjective, but the correlation between low levels of job satisfaction and the mental and physical wellbeing of employees is widely reported. According to the HSE, an estimated 16.4 million working days were lost in 2023/4 because of work-related stress, depression or anxiety accounting for almost half of all the days lost due to work-related ill health.The average UK employee is absent for 7.8 days per year, according to the CIPD, the highest rate in a decade. For a business with 1,000 employees, this can translate into costs of around £1.75 million annually when considering temporary staff, administrative costs, lost productivity, recruitment, and training. Employee benefits play a vital role in tackling the trend for rising employee absences and it’s easy to estimate the money saved from reduced absenteeism or staff turnover. But as the return for some benefits isn’t always financial, it can be harder to assess the net contribution to the business. Where possible, a monetary value should be assigned as this will enable managers to understand the value of the benefits and how they support business outcomes. Stating an objective or goal is a good starting point when putting together a cost-benefit analysis. This will enable the employee benefits ROI to be assessed in context, even if the result isn’t directly linked to a monetary value. Specify a time period too: what will the ROI for each element be during the course of a year?How to measure the cost of employee benefitsSo what is the true cost of employee benefits to employers? The figure typically quoted is in the range of 1.25x to 1.5x base salary, although the calculation will depend on a range of factors, such as the mix of staff rewards and perks, and the size and make up of the organisation—a company with a higher average employee age may need to factor in higher life insurance costs, for instance. To calculate the cost of employee benefits as a percentage of someone’s salary, divide the total annual benefits cost by the annual salary and multiply that figure by 100. Again, there are rewards that are less quantifiable but nonetheless do pay dividends, and should be highlighted as a potential business outcome when considering the cost of employee benefits. Attracting and retaining the best talent, developing a better company culture, and fewer employee sick days can all impact productivity.ROI of employee benefitsAlthough hard to measure specifically, engagement is one of the most important aspects to consider when working out the employee benefits ROI. Gallup suggests that engaged employees “make it a point to show up to work and do more work”, and highlights a reduction in absenteeism of 81% and a 14% difference in productivity with a highly engaged workforce.This is backed up by an independent Forrester Consulting report commissioned by YuLife, which details the effect that engagement has on staff turnover. Forrester examined the ROI that businesses could realise with YuLife’s employee benefits compared to traditional insurers. By aggregating data gathered from HR and benefits professionals into a single composite organisation of 5,000 employees, Forrester estimates that the increase in health and wellbeing engagement delivers a 181% ROI for businesses. Engagement with the app, Forrester suggests, could increase benefit use 2.7x—a critical metric in delivering ROI. The value of rewards and discounts also offer a clear and quantifiable measure of employee benefits ROI. With YuLife, that value is as much as £245 per employee, per year. Add these values together, and you can present a strong case for investment.How to make the most of your employee benefits budgetFor the most efficient use of budget and resources, an all-in-one employee benefits solution represents the most practical option—taking a mixture of long-term support in the form of Life Insurance, Income Protection and Health Insurance, and pairing it with rewards and discounts, daily wellness challenges, EAP, Dental Insurance and Virtual GP services. It’s not solely about a menu of benefits, of course, but the extent to which the staff actually value and use them.How YuLife delivers ROIThis is where YuLife’s unique approach delivers every day. It is 11x more engaging than any other wellbeing programme, with the smartphone app that takes a gamified approach to health providing a daily touchpoint for employees.The YuLife app encourages simple everyday healthy activities such as walking, cycling and mindfulness, incentivised with YuCoin. The digital currency can be exchanged for tangible employee rewards—including vouchers and discounts with leading brands and retailers. Participating in friendly competition with co-workers within the app strengthens company culture, and leads to a better ROI than can be expected with traditional schemes.The app is also the gateway to the YuLife Wellbeing Hub, where staff can access all their company benefits and wellbeing tools.It’s easy for HR professionals to check engagement levels too: YuLife’s powerful HR insights and pulse surveys can be used to measure progress and maximise the value of these employee benefits.Being able to access actionable data by region, age or time of day helps to build an invaluable picture of employee engagement and ROI, as Wellbeing Manager, Paul Caudwell attests: “That’s the core part of what’s bringing us to solutions delivered by technology companies, because we can show that every penny that we spend is making a difference.”Want to learn more? Speak with one of our friendly insurance specialists today.